US GDP Statistics and How to Use Them
The Five GDP Statistics You Need to Know
Gross domestic product measures a country's economic output. That makes it the most important economic indicator.
There are five GDP statistics that give you the best snapshot of the health of the United States economy. U.S. nominal GDP is the basic measure of economic output. Real GDP corrects for changes in prices. The GDP growth rate measures how fast the economy is growing. U.S. real GDP per capita describes the standard of living of Americans. The U.S. debt to GDP ratio describes whether America produces enough each year to pay off its national debt.
The table below gives a snapshot of these five GDP statistics.
1. U.S. GDP
U.S. GDP was $21,062,700 in the first quarter of 2019. What exactly does this mean? The gross domestic product of the United States ran at a rate of $21.063 trillion a year from January through March 2019. The U.S. Bureau of Economic Analysis provides this estimate in the National Income and Product Accounts Interactive Data, Table 1.1.5. Gross Domestic Product.
U.S. GDP is the economic output of the entire country. It includes goods and services produced in the United States, regardless of whether the company is foreign or the person providing the service is a U.S. citizen. To find out the total economic output for all American citizens and companies, regardless of their geographic location, you'd want to look at U.S. gross national product, also known as gross national income.
There are four components of GDP:
- Personal Consumption Expenditures: All the goods and services produced for household use. This is 68% of total GDP.
- Business Investment: Goods and services purchased by the private sector.
- Government Spending: Includes federal, state and local governments.
- Net Exports: The dollar value of total exports minus total imports.
2. Real GDP
U.S. real GDP was $18,912,300 for Q1 2019. This measure takes nominal GDP and strips out the effects of inflation. That's why it's usually lower than nominal GDP.
It's the best statistic to compare U.S. output year-over-year. That's why the BEA uses it to calculate the GDP growth rate. It's also used to calculate GDP per capita. The BEA provides this date in the NIPA charts, Table 1.1.6. Real Gross Domestic Product, Chained Dollars.
3. GDP Growth Rate
The current GDP growth rate is 3.2% as of Q1 2019. This indicator measures the annualized percentage increase in economic output since the last quarter. It's the best way to assess U.S. economic growth.
If you look at U.S. GDP history, you'll see this not a sustainable rate of growth. The ideal growth rate is between 2%-3%. Stronger growth could push the economy into a dangerous boom and bust cycle. The outlook for 2019 and beyond is within this healthy range. That could change if above-average growth resumes.
4. GDP per Capita
To compare the per capita GDP between countries, use purchasing power parity. It levels the playing field between countries. It compares a basket of similar goods, taking out the effects of exchange rates. In 2017, the United States ranked 19th compared to other countries.
5. Debt-to-GDP Ratio
The U.S. debt-to-GDP ratio for Q1 2019 is 105%. That's the $22.028 trillion U.S. debt as of March 31, 2019, divided by the $21.063 trillion nominal GDP. Bond investors use this ratio to determine whether a country has enough income each year to pay off its debt.
This debt level is too high. The World Bank says that debt that's greater than 77% is past the "tipping point." That's when holders of the nation's debt worry that it won't be repaid. They demand higher interest rates to compensate for the additional risk. When interest rates climb, economic growth slows. That makes it more difficult for the country to repay its debt. The United States has avoided this fate so far because it is one of the strongest economies in the world.
If you review the national debt by year, you'll see one other time the debt-to-GDP ratio was this high. That was to fund World War II. Following that, it remained safely below 77% until the 2008 financial crisis. The combination of lower taxes and higher government spending pushed the debt-to-GDP ratio to unsafe levels. Even though the economy is growing at a healthy 2-3% rate, the federal government has not reduced the debt. It keeps spending at an unsustainable level.